* MSCI World Stocks index set for best month on record
* Europe leading with 15% surge
* China official PMI rises to 52.1, tops forecasts
* Dollar and gold out of favour, investors embrace risk
* Oil and industrial commodities lifted by recovery bets
* Sovereign bonds supported by central bank buying
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones and Wayne Cole
LONDON/SYDNEY, Nov 30 (Reuters) - World shares paused on
Monday to assess a record-breaking month as the prospect of a
vaccine-driven economic recovery next year and yet more free
money from central banks eclipsed immediate concerns about the
coronavirus pandemic.
Neither Europe or U.S. futures made further gains, but
November's record-breaking 13% leap has added $6.7 trillion - or
$155 million a minute - to the value of world equities. .EU
.N
The rush to risk has also benefited oil, industrial
commodities and given emerging-market currencies their best time
in almost two years EMRG/FRX , while undermining the safe-haven
dollar and gold.
Helping sentiment further on Monday was a survey showing
that factory activity in China beat forecasts in November, and
the country's central bank surprised with an extra helping of
cheap loans.
Moderna provided the regular Monday dose of vaccine news,
saying it was applying for emergency-use authorization from the
U.S. Food and Drug Administration and conditional approval from
the European Union. "It has been a very, very strong month for markets,
especially on the equity side but also on the fixed income side
too," said Rabobank's head of macro strategy, Elwin de Groot.
The positive developments on vaccines and swiftness with
which they are likely to be rolled out have been key drivers.
"And this market still remains very much supported by
liquidity from the central banks," De Groot said. With the
European Central Bank set to provide more stimulus next month,
"the market view seems to be, what can possibly go wrong?"
Many European markets are boasting their best month ever,
with France up 21% and Italy almost 26%. The MSCI measure of
world stocks .MIWD00000PUS is up nearly 13%, while the S&P 500
.SPX has climbed 11% to record highs.
Asia-Pacific shares outside Japan .MIAPJ0000PUS ended 1.5%
lower on Monday but still finished the month almost 10% higher.
The Nikkei's 15% leap in Japan .N225 was its best month since
1994. .T
"Markets are overbought and at risk of a short-term pause,"
said Shane Oliver, head of investment strategy at AMP Capital.
"However, we are now in a seasonally strong time of year and
investors are yet to fully discount the potential for a very
strong recovery next year in growth and profits as stimulus
combines with vaccines."
Cyclical recovery shares including resources, industrials
and financials were likely to be relative outperformers, he
said.
The surge in stocks has put competitive pressure on
safe-haven bonds, but much of that has been cushioned by
expectations of more asset buying by central banks.
Sweden's Riksbank unexpectedly expanded its bond purchase
program last week, and the European Central Bank is likely to
follow in December.
German 10-year Bund yield DE10YT=RR was down 1.1 basis
points at -0.6% on Monday, its lowest in three weeks. J.P.
Morgan estimates that once inflation is taken into account, 83%
of all advanced economy sovereign debt now has a negative yield.
GVD/EUR
DOLLAR IN DECLINE
U.S. stock futures were fractionally lower before Wall
Street's open and crucial economic indicators later this week.
.N
Risk appetite was underscored, ratings and data agency S&P
Global SPGI.N said it was buying IHS Markit INFO.N for $44
billion in what will be the biggest M&A deal of 2020 so far.
Federal Reserve Chair Jerome Powell testifies to Congress on
Tuesday amid speculation of further policy action at its next
meeting in mid-December.
As a result, U.S. 10-year yields are ending the month almost
exactly where they started at 0.84% US10YT=RR , a solid
performance given the exuberance in equities.
The U.S. dollar has not been as lucky.
"The idea that a potential Treasury Secretary (Janet) Yellen
and Fed Chair Powell could work more closely to shape and
coordinate super-easy monetary policy and massive fiscal
stimulus that could drive a rapid post-pandemic recovery saw the
dollar under pressure," said Robert Rennie, head of financial
market strategy at Westpac.
Against a basket of currencies, the dollar index was pinned
at 91.704 =USD after shedding shed 2.4% for the month to lows
last seen in mid-2018. /FRX
The euro has benefited from the relative outperformance of
European stocks and climbed 2.7% for the month to reach $1.1973
EUR= . A break of the September peak at $1.2011 would open the
way to a 2018 top at $1.2555.
The dollar has had its worst month against emerging-market
currencies in almost two years and even declined against the
Japanese yen, a safe haven of its own. It has lost 0.7% in
November to reach 103.89 yen JPY= , though it remains well
above key support at 103.16.
Sterling stood at $1.3326 GBP= , having climbed steadily
this month to its highest since September, as investors wagered
a Brexit deal would be brokered even as the deadline for talks
came ever closer. One major casualty of the rush to risk has been gold, which
was near a five-month trough at $1,769 an ounce XAU= , having
shed 5.6% in November.
Oil, in contrast, has benefited nearly 30% from the prospect
of a revival in demand should vaccines allow travel and
transport to resume next year. O/R
Some profit-taking set in early on Monday ahead of an OPEC+
meeting to decide whether the producers' group will extend large
output cuts. Brent crude LCOc1 futures fell 58 cents to
$47.60, while U.S. crude CLc1 eased 40 cents to $45.15 a
barrel.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
Global markets have a November to remember https://tmsnrt.rs/2VgAgCB
Emerging market stocks' November to remember https://tmsnrt.rs/33lYqQq
World stocks set for record month https://tmsnrt.rs/2JbbPUT
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